Delta Property Fund acquires R378m property portfolio in Polokwane

Posted On Friday, 02 August 2013 09:45 Published by eProp Commercial Property News
Rate this item
(0 votes)

Delta Property Fund enters an agreement to acquire Phamog Properties for R378m.

Phamoko Towers PolokwaneBlack-owned property loan stock company Delta Property Fund said on Wednesday that it had entered an agreement to acquire the entire issued share capital of Phamog Properties, which would see it buying two government-tenanted buildings in Polokwane, Limpopo, for R378m.

Delta CEO Sandile Nomvete said one of the company’s strategies was to focus on smaller towns, aside from its interests in South Africa’s major cities. "We tend to find better value in the smaller towns and Polokwane is one of those cities."

Mr Nomvete said Phamoko Towers, situated at 37 Church Street in Polokwane, and Temo Towers, at 67 Biccard Street, would be acquired under the agreement at yields just under 10%.

The purchase price was based on the underlying property prices, with Phamoko Towers — where the provincial roads and transport department is a tenant— valued at R242m and Temo Towers — which houses the provincial agriculture department — valued at R136m.

The Phamoko Towers lease expired at the end of October 2018 while the lease expiry of Temo Towers was the end of June 2016, Mr Nomvete said.

With the inclusion of the South African Revenue Service, about 70% of Delta’s portfolio is let to the government.

The fund’s vacancy level is below 4% — much lower than the sector average for office-focused funds.

"We have found a niche for ourselves in the sovereign space," Mr Nomvete said.

He said the portfolio’s sovereign underpin was appealing to "more stable investors" who were not looking for exorbitant returns in economic upswings but were shielded from economic downturns that affected the private sector.

In addition, government buildings tended to have single departments as tenants, which translated to low cost-to-income ratios compared with the rest of the sector.

Mr Nomvete said Delta, one of the JSE’s newest property listings — having listed in November 2012 — was taking steps to "bring the confidence back" into the government niche.

Last modified on Thursday, 17 April 2014 12:40

Most Popular

Should you rent or buy your business premises?

Jun 23, 2022
Malusi Mthuli_FNB
This is a question that most business owners will face at some point in their journey.…

April 2022 Hotel Accommodation Income Statistics continue to show a very weak picture compared to pre-lockdown times.

Jun 23, 2022
Hotels Monthly Income 2022
The StatsSA release of April 2022 preliminary monthly tourism statistics show the Hotel…

South Africa’s inflation exceptionalism: can it last?

Jun 23, 2022
Carmen Nel
South Africa is often seen as a high-beta play, be it regarding financial market risk…

Hyprop continues to reduce debt and reposition its portfolios in SA and EE

Jun 30, 2022
Skopje City Mall Playground
Hyprop, which manages dominant retail centres in mixed-use precincts in key economic…

Vaal Mall rolls up its sleeves for pothole repairs

Jun 30, 2022
Vaal Mall crew busy repairing the various potholes making easier access to the Centre.
Vaal Mall is showing their commitment towards their community by stepping up to repair…

Please publish modules in offcanvas position.